YPF owns 50% of the concessions at Vaca Muerta, which contains the second-largest reserves of shale gas in the world; YPF President Miguel Angel Gutiérrez says that without the new agreement, companies would be investing as much as 30% less this year in Argentina's unconventional resources.
One of the constraints removed by the deal involves the minimum number of workers that union contracts say must be on hand to work at each well, as old rules were discouraged companies from bring new fracking technology - which requires fewer employees - to Argentina
But even with an improved cost structure, analysts say Vaca Muerta may remain largely untapped until world oil prices recover further.
Argentina's government announces a deal with labor unions and energy companies aimed at luring investors to the Vaca Muerta shale, which contains the world's second largest reserves of shale gas but is largely unexplored.
In return for the investment commitments, the government says it will extend a subsidy that enables companies to sell gas at $7.50/MMBtu and eliminate a 15-year-old export duty on oil and oil products; unions promise more flexible working conditions, as high labor costs have been a barrier to Vaca Muerta's development.
Argentina's Pres. Macri proclaims a “new era” for the country’s languishing energy sector, which will see foreign companies including Chevron (NYSE:CVX), Exxon Mobil (NYSE:XOM), BP, Royal Dutch Shell (RDS.A, RDS.B) and Total (NYSE:TOT) as well as state oil company YPFinvest an initial $5B in 2017, rising to $15B in subsequent years.
YPF says the two companies have put nine wells into production via the project with an initial $165M investment, and in the next phase plan to drill 10 horizontal wells and build infrastructure to transport shale oil.
The project is located in the Argentina's Neuquen province, home to Vaca Muerta, one of the world's largest shale reserves.
Norway's Statoil (NYSE:STO) and Argentina’s YPF sign a cooperation agreement to study potential offshore drilling sites off Argentina's Atlantic coast.
The agreement provides for the study of new 2D seismic to be acquired, and STO and YPF will process, analyze and interpret the information during a second stage.
Argentina has vast oil and gas reserves that have gone untapped, in part due unpredictable policies over recent decades, but the country's new president is seeking to normalize the economy and attract investment.
Maxus Energy is defending a $130M settlement with its YPF corporate parent over responsibility for the cleanup of New Jersey’s contaminated Passaic River, saying it was the best option “when compared to the risks of losing everything at trial and garnering no value for the debtors’ creditors.”
Maxus was one of several companies blamed for discharging hazardous substances into the river decades ago, and filed for bankruptcy in June after reaching a deal with YPF over the corporate parent’s alleged liability for the cleanup.
Occidental Petroleum (NYSE:OXY) subsidiary OxyChem, which bought part of Maxus’ business in 1986, contends that YPF is legally responsible as an alter ego for the environmental liabilities owed by its Maxus subsidiary.
YPF has denied liability, and says it should not be responsible for a cleanup bill Maxus agreed to with OxyChem nearly a decade before it purchased Maxus.
Maxus Energy, a U.S. unit of Argentina's YPF, has filed for Chapter 11 bankruptcy protection after reaching a deal on the terms of a settlement tied to liabilities for the cleanup of New Jersey’s Passaic River.
The deal calls for YPF to provide Maxus, which filed for Chapter 11 along with four other affiliates including its Tierra Solutions unit, with $130M, and in return Maxus will drop any “alter ego” claims it may have against its parent for cleaning up the river.
A New Jersey state court ruled five years ago that Maxus and Tierra were responsible for dumping of the highly toxic chemical dioxin into the river in the 1950s and 1960s.
However, Occidental Petroleum's (NYSE:OXY) chemical subsidiary is balking at the proposed environmental settlement; Maxus filed for bankruptcy Friday evening, days before OxyChem was scheduled to head to court over litigation seeking to put YPF on the hook for Maxus' environmental obligations; OxyChem purchased part of Maxus in 1986.
Argentina's YPF (YPF -0.2%) says it has been fined ~$500M by the International Chamber of Commerce arbitration court contract cancellations relating to natural gas exports to Brazil over the last decade.
The Paris-based ICC's court of arbitration's rulings are considered binding, but YPF says it considers the arbitration ruling void.
Argentina suspended sales of natural gas to neighboring Brazil and Chile in 2004, when its production began to fall, but YPF was controlled by Spain's Repsol at the time of the disputed contracts.
Gonzalez, a former Bank of America executive and a former board member of Pegasus Venture Capital, is at the top of a list that includes the current heads of YPF’s E&P division and its refining and marketing unit.
The decision must be confirmed by Argentina Pres. Macri.
Profit on YPF's (YPF -2.4%) shale oil and gas production is "marginal" even with the price of locally produced crude set artificially high by Argentina's government, according to YPF CEO Miguel Galuccio.
Nevertheless, the CEO says YPF will cut capex in 2016 and put rigs in standby mode, as the state-run producer, which invested a third less in 2015 than it had planned, will have to cut this year's capital budget further by as much as 25%, the CEO says.
Galuccio says profit margins could improve as the company, which produces most of the shale from the Vaca Muerta formation in a joint venture with Chevron (CVX +2%), reduces exploration costs; he says YPF has cut the cost of drilling each horizontal well to $13M from $16M, and expects the figure to drop to $10M by the end of the year.
Meanwhile, shale oil output from the vast but barely tapped Vaca Muerta has edged up to 50K boe/day, Galuccio says.